Over the past decade a number of Supreme Court decisions have made it clear that municipal governments do have some authority even in areas that are perceived to be in Federal and Provincial jurisdictions.

1. In the Nanaimo vs. Rascal Trucking Case (2000), the Supreme Court demonstrated that local governments should be listened to and their decisions respected because they are closest to the people most affected by them.
2. In the Hudson vs. Spraytech decision (2001) the Supreme Court made it clear that municipal laws that do not directly conflict with Federal or Provincial laws do have legal standing.
3. In the Canadian Western Bank vs. Alberta case and the BC vs. Lafarge case (both 2007) the Supreme Court clarified its Hudson/Spraytech decision which involved conflict that was direct.  In these cases it ruled that if a bylaw did not indirectly impair a vital or essential part of a federally sanctioned enterprise in a significant way then the bylaw would stand.

From these precedents it appears that should a municipality be forced into litigation in support of issues that the Supreme Court of Canada has already established are within the scope of municipal authority, then the municipality should prevail. 
It must be understood, of course, that a municipality can only prevail if it is allowed to argue the issues that lie within its scope.  Sometimes there are roadblocks....But we’re working on them.